Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
Final Report
GYPSUM MINING & PROCESSING DISTRICT KOHAT, KHYBER PAKHTUNKHWA
Cluster Study
Mineral Transformation Plan Vision 2025 Ministry of Planning, Development & Reforms,
Government of Pakistan.
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
Contents 1. ABOUT THE STUDY...... 7 2. DESCRIPTION OF THE CLUSTER ...... 8 2.1. Introduction ...... 8 2.1.1. Strategic Location of the Cluster ...... 8 2.2. Situational Analysis ...... 10 2.2.1. Enterprise Base...... 10 2.2.2. Products ...... 16 2.2.3. Production Statistics ...... 19 2.3. Institutional Framework ...... 21 2.3.1. Minerals Development Department ...... 21 2.3.2. Forestry, Environment and WildLife Department ...... 23 2.3.3. Pakistan Mineral Development Corporation ...... 23 2.3.4. Labor ...... 23 2.3.5. Environmental Protection Agency ...... 23 2.3.6. The Industries, Commerce, and Technical Education Department (Government of Khyber Pakhtunkhwa) ...... 24 2.3.7. SMEDA Khyber Pakhtunkhwa ...... 24 2.3.8. Frontier Mine Owners Association (FMOA)- Kohat Division ...... 24 2.4. SWOT Analysis ...... 25 2.4.1. Strengths ...... 25 2.4.2. Weaknesses ...... 25 2.4.3. Opportunities ...... 25 2.4.4. Threats ...... 26 3. DEMAND AND SUPPLY GAP ANALYSIS - LOCAL MARKET ...... 27 3.1. Quantum of Supply ...... 29 3.1.1. Supply from Mines ...... 29 3.1.2. Supply from Processing Units ...... 30 3.2. Supply Trends ...... 30 3.3. Quantum of Demand ...... 30 3.4. Demand Trend ...... 31 3.5. Key Market Segments ...... 31 3.6. Potential Niche Markets ...... 32 3.7. Expected Growth of Cluster Products ...... 32 4. DEMAND AND SUPPLY GAP ANALYSIS - EXPORT MARKET ...... 33 4.1. Analysis of Current Exports ...... 33 4.2. Analysis of Country wise Existing Demand ...... 33
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
4.3. Demand and Supply Gap...... 34 4.4. Expected Growth of Cluster ...... 35 4.5. Potential Niche Market with Growth Trends ...... 36 4.6. Key Requirements of Potential Market ...... 37 4.6.1. Gypsum Anhydrite ...... 37 4.6.2. Calcined Gypsum ...... 37 4.6.3. Gypsum Boards ...... 38 4.7. Analysis of Core Competing Products and Countries ...... 39 4.8. Cluster’s Existing and Potential Competitiveness ...... 39 4.9. Major Drivers of Success or Failure ...... 40 5. CLUSTER GAP ANALYSIS IN THE LIGHT OF INTERNATIONAL BEST PRACTICES ...... 41 5.1. Mining ...... 41 5.1.1. Infrastructure ...... 41 5.1.2. Technology ...... 43 5.1.3. Human Resource ...... 47 5.1.4. Access to Finance ...... 47 5.2. Processing ...... 48 5.2.1. Infrastructure ...... 48 5.2.2. Technology ...... 49 5.2.3. Human Resource ...... 54 5.2.4. Access to Finance ...... 54 6. KEY ISSUES ...... 54 6.1. Regulatory ...... 54 6.2. Infrastructure ...... 55 6.3. Technology ...... 56 6.4. Financing ...... 56 6.5. Marketing ...... 56 6.6. Social ...... 56 7. PROPOSED INTERVENTIONS ...... 58 7.1. Regulatory ...... 58 7.1.1. Ammendments in Mineral Policy ...... 58 7.1.2. Ammendments in Industrial Policy ...... 59 7.2. Infrastructure ...... 60 7.2.1. Mines Access Roads for Mine ...... 60 7.2.2. Establishment of Gypsum Processing Zone ...... 61 7.3. Technology ...... 62 7.3.1. Machinery Pools for Mining ...... 62 7.3.2. Establishment of Gypsum Processing Factory on International Standards ...... 63
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
7.4. Financing ...... 64 7.4.1. Financial Support to Mining Sub Sector ...... 64 7.4.2. Upgradation Support to Processing Sub Sector ...... 65 7.5. Formulation of Marketing Strategy ...... 65 7.6. Social ...... 66 8. Economical, Social, and Environmental Impacts ...... 67 8.1. Economic Impacts ...... 67 8.1.1. Individual Impact on SMEs...... 67 8.1.2. Impact on overall Cluster ...... 69 8.2. Environmental Impacts ...... 69 8.3. Social Impacts ...... 69 8.4. Key Economic Indicators Analysis ...... 70 8.4.1. Contribution to GDP ...... 70 8.4.2. Economic Rate of Return on Investment ...... 70 8.4.3. IERR, Payback Period, and Net Present Value ...... 70 9. Additional Inforamtion ...... 71 ANNEXURE-I: Record Note of Gypsum Kohat Cluster FGD...... 71 ANNEXURE-II: SMEDA OFFICES’ ADDRESSES ...... 78 ANNEXURE-III: Quotations for Plaster of Paris Plants ...... 82 ANNEXURE-IV: Quotations for Gypsum Boards Unit ...... 83
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
Table 1: Gypsum Mining in Khyber pakhtunkhwa ...... 8 Table 2: Kohat Gypsum Cluster Summary ...... 10 Table 3: Mining Activities by Size of Organization ...... 11 Table 4: Gypsum Stocking Points in Kohat Divisions ...... 12 Table 5: Gypsum Processing Units in Kohat Division- by Size ...... 13 Table 6: Processing Units in Kohat Division- by Location ...... 16 Table 7: Marketing Mix of Mines...... 17 Table 8: Marketing Mix of Processing Units ...... 18 Table 9: Testing Parameters of Plaster ...... 19 Table 10: Production Statistics of Mines ...... 19 Table 11: Production Statistics of Processing Units ...... 19 Table 12: Production of Gypsum Crush- Individual Unit...... 20 Table 13: Cummulative Production of Crush ...... 20 Table 14: Production of Uncalcined Powder ...... 20 Table 15: Cumulative Production of Gypsum Crush Units ...... 20 Table 16: Production of Gypsum Plaster- input vs output Of an Individual Unit ...... 20 Table 17: Production of Gypsum Plaster- Individual Unit ...... 21 Table 18: Production Detail of Processing Units ...... 30 Table 19: Pakistan's Exports of Gypsum Products ...... 33 Table 20: Top 03 Exporters of Gypsum Anhydrite to India ...... 33 Table 21: Top Three Importing Countries of Gypsum Products ...... 34 Table 22: World' Gypsum Trade ...... 34 Table 23: Pakistan's Gypsum Products International Trade ...... 35 Table 24: Pakistan's International Trade Projection (Year 2025) ...... 35 Table 25: Gypsum Products' Shift of Consumption ...... 36 Table 26: Requirements of Gypsum Boards for Plaster ...... 37 Table 27: Key Requirements of Gypsum Boards ...... 38 Table 28: Detail Of Gyspum Processing Zone ...... 61 Table 29: Detail of Machinery Pool ...... 62 Table 30: Detail Of Gypsum Processing Factory ...... 63 Table 31: Revenue Stream Of The Project ...... 63 Table 32: Detail Of Intervention ...... 64 Table 33: Detail of Intervention ...... 65 Table 34: Economic Impact-Upgradation of a Single Quarry ...... 68 Table 35: Economic Impact- Mechanization of Stocking Yard...... 68
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
Figure 1: Gypsum mining And Processing in Kohat Division ...... 9 Figure 2: Gypsum Mines and Powder Processing ...... 9 Figure 3: Gypsum Mining in Kohat Division ...... 10 Figure 4: Gypsum Stocking Points ...... 12 Figure 5: Small Scale Mining Process Flow ...... 12 Figure 6: Medium Scale Mining ...... 13 Figure 7: Coarse Gypsum Powder Processing ...... 14 Figure 8: Grinding Machine ...... 15 Figure 9: Sealing Machine ...... 15 Figure 10: Gypsum Crush ...... 16 Figure 11: Plaster Processing...... 16 Figure 12: Gypsum Rock of Pakistan- Technical Detail ...... 17 Figure 13: Supply Chain of Gypsum Cluster- Kohat Division ...... 28 Figure 14: Projected Consumption of Gypsum in Pakistan (Million Tons) ...... 32 Figure 15: Current Vs Projected Scenario of the Cluster...... 36 Figure 16: Pakistan's Competitors ...... 39 Figure 17: Mining Infrastructure in Iran ...... 41 Figure 18: Mines to Main Roads in Kohat Davison ...... 42 Figure 19: Mine Access Road in Krapa, Kohat Division ...... 42 Figure 20: Surface Mining- Technology at Gypsum Mines of Oman ...... 43 Figure 21: Sub Surface Gypsum Mining in France ...... 43 Figure 22: Vermeer Terrrain Leveler for Gypsum Mining ...... 44 Figure 23: Primitive Hand Drilling for Explosives ...... 45 Figure 24: Drilling for Explosives- Pneumatic Drills ...... 45 Figure 25: Manual Loading At Mines ...... 46 Figure 26: Gypsum Extraction at Mechanized Mine of Kohat Division ...... 46 Figure 27: Gypsum Loading at Mechanized Mine- Kohat Division ...... 47 Figure 28: Crushing at Gypsum Mine of White Mesa, Sandoval County- USA ...... 48 Figure 29: Gypsum Powder Industry of China ...... 49 Figure 30: Gypsum Powder Plant By Henan Liming Heavy Industry Science & Technology Co...... 50 Figure 31: Gypsum Powder Unit at Krapa, Kohat Division ...... 50 Figure 32: Gypsum Crush and Powder Plant at Iran ...... 51 Figure 33: Gypsum Crushing in Karak, Kohat Division ...... 51 Figure 34: Gyspum Crush Sifting ...... 52 Figure 35: Loading on Crush Plants, Kohat Division ...... 52 Figure 36: Plaster of Paris Production Line By Precious Group- India ...... 53 Figure 37: Plaster of Paris Plants- Kohat Division ...... 53
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
1. ABOUT THE STUDY
This specific document aims to study the Gypsum Mining and Processing Cluster of Kohat Division, Khyber Pakhtunkhwa.
The survey conducted mainly based on Focus Group Discussions (FGDs), Key informant discussion, and one to one interviews of SMEs in the business of mining, processing and trading by random sampling techniques. The inputs were analysed by using Statistical Package for social Sciences (SPSS) followed by the SMEDA team’s review, and expert opinion by geologists and external management consultants.
The tools used in the study were:
Questionnaire for Cluster Associations Questionnaire for Gypsum miners of Kohat Division Questionnaire for Gypsum processors of Kohat Division Questionnaire for Plaster of Paris products manufacturers of Peshawar Questionnaire for Gypsum traders of Kohat Division SPSS (Data Analysis Software)
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
2. DESCRIPTION OF THE CLUSTER
2.1. Introduction
Pakistan is endowed with natural resources in huge reserves of Gypsum that is concentrated in Khyber Pakhtunkhwa (Khyber Pakhtunkhwa). It is estimated that about 92% of Pakistan’s gypsum reserves, that is, 5.5 Billion tons exist in Khyber Pakhtunkhwa. The gypsum production of the province from 70 mines is estimated to be 4.2 million tons per annum.
TABLE 1: GYPSUM MINING IN KHYBER PAKHTUNKHWA Districts Number of Leases Abbottabad 02 D.I. Khan 01 Hangu 01 Haripur 06 Lakki Marwat 01 Kohat 30 Karak 29 Total 70
Kohat division that comprise of Kohat and Karak districts accounts for 89%, that is, 4.9 Billion tons of Khyber Pakhtunkhwa’s high quality gypsum of. It has 59 mine leases. The production for year 2017, is estimated to 3.5 million tons.
The processing industry of gypsum was initiated in Kohat division after the discoveries of gas and oil in Karak in 2007. These production units were mostly established at roadside in vicinity to the mines that is a global practice due to the bulky nature of gypsum. Currently, there are 158 processing factories including plaster of Paris plants, gypsum powder units, and crush plants.
2.1.1. Strategic Location of the Cluster
As a whole the cluster is at distance of 30 Km from Kohat Cement Factory, 175 Km from Cherat Cement Factory (Nowshehra), 245 Km from Lakki Cement Factory (Pezu, Lakki Marwat), 1,100 Km from Cement Factories of Karachi, 1,226 Km from Karachi Port, 1,615 Km from Gawadar Port, 522 Km from Wahgah Border Lahore and 181 Km from Torkham border.
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
FIGURE 1: GYPSUM MINING AND PROCESSING IN KOHAT DIVISION
FIGURE 2: GYPSUM MINES AND POWDER PROCESSING
All of the mines and processing units are engaged in direct sales of their products to crush plants, powder plants, plaster of Paris units. The role of middleman is limited to the supplies of cement factories and gypsum board processing plants.
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
2.2. Situational Analysis
2.2.1. Enterprise Base
The gypsum mining areas of Kohat Division are spread along 04 main roads, namely: ➢ Main Indus Highway (Area: Spina Banda, and Link Road to Nari Panos) ➢ Kohat Rawalpindi Road (Area: Siyab) ➢ Shakardara Kalabaagh Road (Area: Shiwaki) ➢ Old Bannu Road (Area: Jhatta Ismail Khel, and Krapa)
TABLE 2: KOHAT GYPSUM CLUSTER SUMMARY Name of the Sub No. of Units Employment Estimated Investment Sector (Rs.) Mines Leases : 59 59 3,100 1.49 Billion Stocking yards: 43 172 24 Million Processing units 157* 1,580 1.3 Billion Total 217 4,852 2.79 Billion
* As 64 units are closed, therefore these are not mentioned in the section of goals and objectives, resulting in the total number of 152 (59 mines + 93 processing).
Out of the 59 mine lease holders, 05 have their own Plaster of Paris and Powder processing Units on old Bannu road.
Gypsum Mining
FIGURE 3: GYPSUM MINING IN KOHAT DIVISION
Note: The orange line shows roads with mining areas
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
Though the number of mine leases is 59 and the average number of quarries on each mine is 10 making the total number of quarries to be 590, but due to the factor of occupations on mines and subletting, the miners don’t reveal the name of actual investor. So, it is difficult to asses the actual number of SMEs engaged in the quarrying. Therefore this study considers seach mine lease as an SME and the investment per mine lease as the investment of single SME. Investment per mine lease is estimated as under:
❖ Labor Intensive Small Scale Mine: Rs. 05 Million per mine (Including investment of Rs. 0.5 Million on each quarry). ❖ Mechanized Medium Scale Mine: Rs. 25 Million per mine (Including Rs. 05 Million per quarry) ❖ Mechanized Large Scale Mine: Rs. 100 Million per Mine
Gypsum mining is dominated by medium scale enterrpises, comprising 93% of the total in terms of investment as well as number of leases.
TABLE 3: MINING ACTIVITIES BY SIZE OF ORGANIZATION Description Number of Number of Number Investment Leases Quarries/Mine of (Rs.) Employees Labor Intensive- Small 03 10 300 15 Million Scale Mechanized- Medium Scale 55 10 2,750 1.38 Billion Mechanized- Large Scale 01 10 50 100 Million Total 59 3,100 1.49 Billion
In case of labor intensive mine, each quarry employs 10 persons on averagewhereas that of a mechanized mine, this is 05 persons per quarry.
Due to the factor of illegal mining, the informal sources of borrowing, and the rental machinery the exact number of business owned machinery can not be exactly calculated. Similarly, the unregistered heavy earth moving machinery keeps moving from quarry to quarry which makes it difficult to observe the exact number of excavators. Same is the case with the dumpers and trucks having frequent movement. Based on the careful estimates of the field survey, it is however estimated that there are about 90 excavators (both owned and rented) and 25 dumpers/trucks owned by the miners.
All of the Mine Owners from Jhatta Ismail Khel, and Nari Panos have their own open area stocking points adjacent to the main roads whereas those of the other areas prefer to deal directly from mines. The labor is engaged only for loading on per trolley basis and on average 04 persons are engaged per stocking point.
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
FIGURE 4: GYPSUM STOCKING POINTS
TABLE 4: GYPSUM STOCKING POINTS IN KOHAT DIVISIONS Area Number of Number of Points Employees Bannu Road 23 92 Indus Highway 20 80 Total 43 172
About 90% of these stocking yards rely upon manual loading and only 10% use the loaders for purpose.
Small Scale Mining Operations
Small scale mining is often done on primitive methods. This type of mining is totally labor intensive. FIGURE 5: SMALL SCALE MINING PROCESS FLOW
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
Medium and Large Scale Mining Operations
This type of mining is either done with the help of used pneumatic drilling machinery or by use of second hand heavy earth moving machinery. The first method is applied at points with heights impossible to reach with heavy machinery. Owing to the difficulties in obtaining explosives, the cluster is quickly shifting to the use of excavators for gypsum extraction and then rock splitting with the attached Jack Hammer. Majority of such mine owners arrange excavators on rental which are available at Tarnol (Rawalpindi) as well as Chungi (Karak).
FIGURE 6: MEDIUM SCALE MINING
The quarrying activities depict different practices as per the localities, for example, in mining belts of Pindi road, Shakardara road, and Indus highway, the mine owners normally conduct quarrying activities by themselves and hire labor on daily wages basis. As compared to this, the local communities of Bannu road, often occupy and operate the quarries by themselves and pay the mine owners a mutualy decided percentage of the excavated quantity.
Gypsum Processing
The gypsum processing activities of the Kohat Division comprise of small and medium scale units. These units are of powder units, crush plants and plaster of paris as explained below:
TABLE 5: GYPSUM PROCESSING UNITS IN KOHAT DIVISION- BY SIZE Description Size of the Firm No. of Investment (Rs.) Units Gypsum Powder Processing Small Scale 12 12 Million Gypsum Crush Plants Medium Scale 15 105 Million Plaster of Paris Plants Medium Scale 131* 1.18 Billion Total 157 1.3 Billion * Though 67 units are closed but total number is mentioned here, so that to refelect the actual amount of investment.
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
Gypsum Powder Unit:
These are highly dependent upon the orders from farmers from Punjab and India to be used as soil enhancer in their fields. Gypsum powder is also procured by the manufacturers of the plaster units but in small quantities. Due to heavy dependence upon orders from Punjab based traders, these units operate on demand base, so most of the time these remain nonoperational. As a result, the investment in such units is of small scale with an average investment of Rs. 01 Million.
FIGURE 7: COARSE GYPSUM POWDER PROCESSING
Gypsum rock from mine is manualy hammered into required pieces and fed into the syndicators for further crushing. Normally the crushed powder is manually loaded on trolleys without sieving. For this, the plant has a daily capacity of 1,200 bags (60 Tons per day).
In case of the demand of fine powder, it is finally grinded with local grinder/chakki and then sealed with the help of a small hand holded machine.
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
FIGURE 8: GRINDING MACHINE
FIGURE 9: SEALING MACHINE
Gypsum Crush Plants
Gypsum crush plants are the medium scale business with an average investment of Rs. 07 Million. These units crush the handpicks and through jaw crusher and then with the help of conveyor belts and sieves, separate them into different sizes from 1 inch to 5 inch.
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
FIGURE 10: GYPSUM CRUSH
The gypsum rock after crushing in the Jaw Crusher is sieved into various sizes and then dumped in shape of piles at site.
Plaster of Paris
Plaster of Paris Plants are of medium scale with an average investment of Rs. 9 Million All of the Plaster of Paris manufacturing units are also engaged in the demand based Uncalcined Gypsum Powder production. FIGURE 11: PLASTER PROCESSING
TABLE 6: PROCESSING UNITS IN KOHAT DIVISION- BY LOCATION Operation Area Number of Units Gypsum Powder Speena, Main Indus Highway 07 Processing (Karak) Krapa, Bannu Road (Karak) 04 Shakardara (Kohat) 01 Gypsum Crush Plants Indus Highway 15 Main Highway Karak (04) Nari Panos Road Karak (13) Plaster of Paris Plants Bannu Road (Karak) 130 Kohat- Rawalpindi Road (Kohat) 01 Total 158
2.2.2. Products
Mining
All of the mines produce boulders of handpick size. Only few of them, having heavy Earth moving machinery are able to break the handpicks into smaller sizes by using Jack Hammers.
Normally, the product of gypsum mines is in shape of rock bigger than 2 ft in size, which is then crushed as per its application either by labor or by Jack Hammer. Few advanced mines with heavy earth moving machinery also crush it below 2 ft through Jack Hammers.
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
FIGURE 12: GYPSUM ROCK OF PAKISTAN- TECHNICAL DETAIL1
TABLE 7: MARKETING MIX OF MINES Product Size Target Market Packaging Price Range (Rs./Ton) Gypsum Rock 2’ Local No packing 200 to 360 ▪ Cement Plants ▪ Crush Plants ▪ Plaster Factories ▪ Powder Factories
1 Source: Full name of Dong Feng Board (DFB) Gypsum
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
Processing
TABLE 8: MARKETING MIX OF PROCESSING UNITS Description Size Target Market Packaging Price/Unit (Rs.) Gypsum ▪ Local Plaster of Recycled bags: 50 Kg 55/bag Powder Paris factories New Bags: 52 Kg ▪ Domestic Agriculture farms ▪ Exports to India ▪ Cement Plant of No packing 320/Ton Gypsum Lakki Marwat, Crush Khyber Pakhtunkhwa ▪ Exports to Mini cement plants of India ▪ Surgical Uses Recycled bags: 50 Kg 200/bag Gypsum ▪ Construction New Bags: 52 Kg Plaster industry
The crush is tested as per the existence of Gypsum content in the sedimentary rock. Normally, it ranges between 80 to 95%, and the gypsum of Kohat region has proven to be of best quality, i.e. above 90%.
In case of the gypsum powder and plaster the standard practice is to sieve the small crush for impurity and then grind it to powder so that to obtain fine quality powder and plaster. As compared to this, only a handful of the progressive mine owners practice this, otherwise the majority of processors simply crush the lumps into powder without any sieving. This type of conventional practice renders the quality deteriorated. The performance of the powder depends upon its crystals’ sizes and shapes.
As per the description of the “Dongfeng Board” for its plaster, the following standard can be considered for Pakistan.
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
TABLE 9: TESTING PARAMETERS OF PLASTER Description Properties Chemical Composition Calcium Sulphate Hemihydrates CaSO4. ½ H20 Fineness 4 to 6% only remaining on sieve 200u Initial Setting Time From 3 minutes for speedo plaster to 10 minutes as per requirement Final Setting Time From 12 minutes for speedo plaster to 30 minutes as per requirement Compressive Strength Greater than 10.5 MN/m2 or 1525 psi (pure plaster) Density 1100 kg/meter cube Thermal Conductivity 0.22 W/m. K (i.e. gypsum plaster’s insulation is about five times better than cement-sand plaster
2.2.3. Production Statistics
Mining
The production has been increasing due to the following four factors:
➢ Commencement of activities on new mine leases; ➢ New quarries on existing mine leases; ➢ Re-operationalization of mines which may have closed due to community issues; management problems, or departmental orders; ➢ Shifting of the mining techniques from explosive based mining to heavy machinery based operations.
TABLE 10: PRODUCTION STATISTICS OF MINES Type of Mining No. of Average Annual Total Annual Operational Production (Tons) Production (Tons) Mines Mechanized mining 59 59,400 3,504,600
Processing
TABLE 11: PRODUCTION STATISTICS OF PROCESSING UNITS
No of Average Annual Total Annual Description Units Production (Tons) Production (Tons)
Gypsum crush 15 55,200 828,000 Gypsum powder 12 2,850 34,200 Plaster of Paris 66 3,360 221,760 Total 93 1,083,960
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
Gypsum Crush Processing
TABLE 12: PRODUCTION OF GYPSUM CRUSH- INDIVIDUAL UNIT Rock Input Wastage Crush Output Tons/Day Tons/Year % Tons/Year 230 69,000 13,800 55,200
TABLE 13: CUMMULATIVE PRODUCTION OF CRUSH Number of Crush Plants Tons/Unit Tons/Year 15 55,200 828,000
Gypsum Uncalcined Powder Processing
The installed capacity of a single processing unit is 20 tons per day. As these units are heavily dependent on orders from India and Punjab, so these remain operational on demand basis for about 150 days per year.
TABLE 14: PRODUCTION OF UNCALCINED POWDER Rock Input Wastage Crush Output Tons/Day Tons/Year % Tons/Year 20 3,000 150 2,850
TABLE 15: CUMULATIVE PRODUCTION OF GYPSUM CRUSH UNITS Number of Crush Plants Tons/Unit Tons/Year 12 2,850 34,200
Gypsum Plaster (Calcined Powder/Plaster of Paris) Processing
Each factory engaged in plaster of Paris manufacturing has a single syndincator capable of producing 20 tons per days, but the operating capacity of such unit is determined by the following two factors:
1. Type of Furnace by Heat Source: Gas or Coal/Wood 2. Number of Furnances
TABLE 16: PRODUCTION OF GYPSUM PLASTER- INPUT VS OUTPUT OF AN INDIVIDUAL UNIT Input Rock Input Wastage Plaster Output Technology Tons/Day Tons/Year % Tons/Year Gas Operated Plants 30 9,000 450 8,550 Coal/Wood Operated Plants 12 3,600 180 3,420
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
TABLE 17: PRODUCTION OF GYPSUM PLASTER- INDIVIDUAL UNIT Technology Bags/Hour Hours Days Bags/Year Gas Operated Plants 70 8 300 168,000 Coal/Wood Operated Plants 28 8 300 67,200
The working of this specific document is based on the coal operated furnces.
2.3. Institutional Framework
The type of institutions by role are different for mining and processing sub sectors, explained as below;
2.3.1. Minerals Development Department
Following departements are responsible for the development of minerals in the province:
Provincial Minister Mines and Minerals Development Department
Secretary Mines and Minerals Development Department
Director General Chief Inspector Commissioner Directorate General Mines Mines of Mines and Inspectorate of Mines Commissionarate of Minerals and Minerals Mines and Minerals
Pursuance to the implementation of National Mineral Policy (NMP) and directives of the Chief Executive of Pakistan on June 04, 2001, the Directorate General Mines & Minerals was established vide notification dated August 18, 2001. . The creation of the DGMM is based on NMP 1995 in line with the Australian Technical Aid (AusAid) consultants report, 1997.
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
After 18th Amendment to the Constitution of Pakistan, the Minerals Development Department (MDD) has been given the custodial rights of mineral resources of Khyber Pakthunkhwa. First ever Provincial Mineral Policy was formulated in 2014. In light of Khyber Pakthunkhwa Minerals Policy 2014, Khyber Pakhtunkhwa Mineral Sector Governance Act 2017 and Rules 2017 have been formulated and promulgated.
In the year 2014 the department was further divided into three departments, namely:
➢ The Directorate General of Mines and Minerals ➢ Inspectorate of Mines and Minerals ➢ Commissionrate of Mines and Minerals
Directorate of Mines and Minerals
It has the following responsibilities:
• Grant of mineral titles • Collection of rents & royalties on minerals • Control of unauthorized excavation and transportation of minerals • Compilation of mineral production data • Geological Mmapping of mineral bearing areas • Evaluation of mineral resources • Promotion and exploration of minerals • Provision of mineral testing facilities • Technological management of mineral titles
Inspectorate of Mines and Minerals
The department is responsible for:
• Mining laws implimentation • Training on mining safety • Mines accidents investigation and forwardig the cases to commissionrate of worksman compensation • Mines site inspection
Commissionrate of Mines and Minerals
The commissionarate has the following responsibility of Worksman compensation : • Collection of cess tax • Marriage funds • Childern Education
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
• Accidents Compensation in case of major injuries or death during work
2.3.2. Forestry, Environment and WildLife Department
Forestry, Environment & Wildlife Department is striving to improve the Forest, Environment and Wildlife through development & application of innovative technologies in Forest, Environment and Wildlife and efficient management of natural resources.
2.3.3. Pakistan Mineral Development Corporation
PMDC is an autonomous corporation under the administrative control of Ministry of Petroleum and Natural Resources , Government of Pakistan. It was established in 1974 with an authorized capital of Rs.1,000 million to expand and help mineral development activities in the country.
It is involved in exploration and evaluation of economic mineral deposits, preparation of techno-economic feasibility reports, mining and marketing. Currently it is operating two salt mines at Karak.
2.3.4. Labor
The Directorate of Labour (like its administrative Department i.e. Labour Department) is the custodian of the guaranteed rights of the workers like right to organize, right to collective bargaining, participation in the affairs of the respective organization, health & safety, minimum wages, compensation, etc.. For realization of its role, it enforces various labour laws. Through the implementation of the labour laws it ensures compliance of the International Labour Standards and thus contributes to achieving GSP, GSP+, GSP++, MFN, etc. status by securing higher position in the grading system applied by the granting countries, regions and organizations. It also enforces international system of weights and measures in the province. Besides, it carries out awareness raising drive in the workers, employers and other stakeholders on labour issues, labour laws and contemporary issues.
2.3.5. Environmental Protection Agency
Administer and implement the Act 1997, its rules and regulations Review of IEE/EIA, preparation of procedures and guidelines. Preparation revision and enforcement of NEQS (Industries, Municipalities, Vehicular emission) Establish & maintain laboratories, certification of laboratories for conducting "tests and analysis" Assist local Councils/Authorities, Govt. Agencies in execution of projects.
Establish a system for surveys, monitoring, examination and inspection to combat pollution Conduct training for Govt. functionaries & industrial management Provide information and education to the public on environmental issues Publish the Annual State of the Environment
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
report. Survey & Qualitative & Quantitative data on air, soil, water, industrial/Municipal & traffic emissions Take measures to promote environment related R&D activities.
The gypsum miners and processors have to obtain NOC from EPA before commencement of operations.
2.3.6. The Industries, Commerce, and Technical Education Department (Government of Khyber Pakhtunkhwa)
This department is striving to promote industrial development, trade and investment in Khyber Pakhtunkhwa. Industrial Research, Industrial training (including training of demonstration parties) Industrial exhibition within the country Survey of industries, Trade, and commerce, within the Province, including Government commercial undertakings, Merchandise Marks Act, Registration of Accountants, Auditors Certificate Rules, Partnership Act, trade condition reports, trade inquiries and agreements. Registration of Joint Stock Companies, Firms, Societies Store Purchase Department, purchase of stores and capital goods including stores for Government Presses and Public Works Department.
2.3.7. SMEDA Khyber Pakhtunkhwa
SMEDA is a federal government organization working under Ministry of Industries and Production for the facilitation and development of Small and Medium Enterprises in Pakistan. SMEDA plays an important role in long term development and growth of the Gypsum mining and processing cluster Kohat. SMEDA provides policy and strategy level inputs to DGMM Khyber Pakhtunkhwa in formulation of investment friendly policies. SMEDA also provides help desk facilitation, legal facilitation, capacity building, networking and linkages development directly to SMEs.
SMEDA has designed number of long term economic development initiatives including rock mining training institute, model quarry project, industrial state and etc. In collaboration with Inspectorate of Mines and Minerals the SMEDA has provided various trainings on controlled blasting techniques, and mining safety,.
SMEDA has also upgraded 02 mining and processing enterprises by providing matching grant support through the MDTF funded ERKF Project for procurement of machinery.
2.3.8. Frontier Mine Owners Association (FMOA)- Kohat Division
Frontier Mine Owners Association is a registered association of all mine owners across Khyber Pakhtunkhwa representing the entire mining sector of all minerals in the Province. This association has members from Kohat cluster as well. The association represents stakeholders from both marble mining and processing of like other minerals at every platform.
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
The office bearer “Mr. Abdul Qayyum” of FMOA, Kohat division is also a member of the Project Steering Committee (Research/Feasibility Study Mineral Sector Transformation Plan).
2.4. SWOT Analysis
2.4.1. Strengths
Local reserves of Raw Material (Gypsum) in huge quantity. Availability of labor on contract system. Simple processing operations having minimum reliance upon skilled labor. Low costs of land acquisition. Availability of locally fabricated low cost machinery. No cheaper substitutes available.
2.4.2. Weaknesses
Problems and delays in obtaining licenses for use of explosives for mining. Intense competition on price basis due to very limited product mix. ▪ The bargaining power of the suppliers remain weak for unprocessed gypsum as there are already a large number of suppliers in the market. ▪ The bargaining power of the buyers is high. Poor quality of processed powder in terms of mesh sizes. Farmers unaware of the soil conditioning effects, therefore negligible domestic sale. Processing units relying upon machinery which is cheaper but results in loss of thermal energy, so increase operational costs as well as threat to environment in shape of air pollution. Local machinery is not energy efficient and causes over use of gas whereas the coal is also expensive because of being procured from Tarnol and Hyderabad.
2.4.3. Opportunities
The business of mining and processing can be started with small investment. Increasing demand of gypsum crush domestically as well as in the neighboring country of India The existing major exporters to India are Thailand and Iran but future supplies from both the countries is expected to decrease due to their own domestic consumption and reduced production. Increasing demand of green products throughout the world. The CPEC (Kashgar to Gawadar) may reduce the transportation costs for exports via sea. Increasing demand of gypsum boards in Central Asian Republics and Russia. High costs of gypsum tiles from Denmark to Sri Lanka means new market for Pakistani gypsum tiles. Therefore, investment in gypsum ceiling tiles in the cluster.
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
Increased urbanization and improved socio economic conditions of Kohat division’s people paving way for improved housing. Climate change and global warming increasing the demand of products in construction offering optimum protection against temperature.
2.4.4. Threats
Increased investments in conventional products of gypsum crush, powder, and plaster of Paris leading to increased competition. Security situation and the increased restrictions on licenses for explosives. Growing reluctance of transporters to take carriage to Wahga border due to delays in unloading and clearance. Ban on gas connections for plaster processing industry. Increased production and export by Oman through the port of Salalah with lower prices of gypsum anhydrite.
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
3. DEMAND AND SUPPLY GAP ANALYSIS - LOCAL MARKET
Heavy dependence of the cluster upon the conventional buyers in shape of Cement Factories and the distances involved, makes the miners and crush processors comprise upon profits resulting from lower prices. The greater the distance the lesser the per ton price.
Freight Charges
Price of Gypsum Rock Inter Provincial Marketing Factors
Gypsum rock of the Kohat Division despite having superior quality as compared to the rest of the country fetches lower prices while competing with the mines of Punjab. That is the average prices of Kohat Cluster gypsum rock at mine is Rs. 400 whereas the miners of Punjab get Rs. 500 per ton. This is mainly because of the lower freight cost advanatage of Punjab due to being closer to the Sind, and Wahgah border. For example, the average cost of gypsum transportation fom southern Punjab to Wahgah border is Rs. 900 per ton in comparison to the Kohat Cluster’s Rs. 1,200 per ton. Due to this difference, the miners and crush plants of Kohat cluster have to reduce the per ton gypsum rock prices of mine site.
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
Inter Cluster Marketing Factors
The mines of Jatta Ismail Khel are able to get the highest prices due to their supply and proximity to the plaster of paris factories on Bannu Road located within 07 Kms distance from them. Those of the Speena Banda, on Indus Highway sell on lower average prices of Rs. 300 because of the loading labor and transportation cost to the processing industries. The mines of Kohat Pindi road are supplying to the cement factories of Khyber Pakhtunkhwa and Punjab at an average price of Rs. 360 per ton. However, the mines of Nari Panos area either supply to the nearest crush plants, or distant cement plants, so their prices are lowest of entire cluster at Rs. 200 per ton.
FIGURE 13: SUPPLY CHAIN OF GYPSUM CLUSTER- KOHAT DIVISION
Note: Processing in the coloured box are done within Kohat Division. 67 plaster plants are temporarily closed
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
3.1. Quantum of Supply
The mining activities are halted during severe weathers, and neglible during the month of Ramadan. Similarly, the cluster activities are closed during extended eid holidays and also at the time of crop sowing and harvesting. All these factors are incorporated during computation of operational capacity of a mine or processing unit.
3.1.1. Supply from Mines
The supply from gypsum mines of Kohat Division started in early 80’s which can be mainly attributed to the establishment of Cement factories in the province. Discussion with public sector organizations, and private sector key informants revealed that the production from the mines is underreported. The main reason, is the illegal mining in shape of subletting and the forceful occupation by some local elements. The survey teams find it difficult to visit such sites due to sense of insecurity. In addition to this, dumping at informal open area stocking yards makes it further difficult to assess the material inflow and outflow.
On the basis of response from 10 mines, the estimated average production was observed to be 198 Tons per day and with 300 working days, the annual supply from 59 mines is calculated to be 3.5 million tons.
During the same survey 46 % (1.6 million tons) of the gypsum rock was reported to be supplied within the Khyber Pakhtunkhwa, 35% (1.23 million tons) to Punjab and remaining 19% (0.7 million tons) to Baluchistan and Sindh.
Small Scale Mines
On average the installed capacity of a small scale labor intensive mine is 40 Tons/ Day whereas the capacity utilization is 70%.
Medium Scale Mines
The installed capacity of mines with compressed air machinery is 525 tons per day, and the operational capacity of 210 tons per day. With the advent of heavy earth moving machinery to mines, the daily installed capacity has increased to 896 Tons per day, while the operational capacity of Kohat Division is 448 Tons per day.
The capacity of the stocking yards is about 24 tons while on the daily basis about 8 tons is loaded.
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
3.1.2. Supply from Processing Units
A. The installed capacity of plaster of Paris factories though remains the same, but its utilization or operational capacity depends upon the source of energy used for heating the kilns/furnaces. The gas operated factories process 70 bags (50 Kg per bag) in 1 hours whereas in case of coal and wood the time required is 2.5 to 3 hours for the same quantity, therefore these process 28 bags (50 kg per bag) in an hour. After the crack down of the district administration against illegal connection, 64 gas operated units were closed, so the capacity utilization decreased drastically.
TABLE 18: PRODUCTION DETAIL OF PROCESSING UNITS Installed Capacity % Capacity Description No of Units Capacity Utilization Utilized (Tons/Year) (Tons/Year) Gypsum Crush 15 2,484,000 828,000 33% Gypsum Powder 12 615,600 34,200 5% Plaster of Paris 130 2,440,800 221,760* 9.7% Total 157 5,540,400 1,099,800 20.6% *Capacity utilization is estimated on the basis of currently 66 operational units on 8 hours shift basis
3.2. Supply Trends
The supply of gypsum from the mines of Kohat division has been continuously increasing due to the increased number of mines converting to modern technology. The supply of uncalcined gypsum powder mainly remains the demand based operations of processing units. In case of gypsum plaster, during the last few years, the district administration of Karak has taken strict measures against illegal gas connections by Plaster of Paris factories. Though the survey of local communities revealed that discrepancies still exist, however, the shifting of plants to coal and wood from gas results in decrease of production by more than 50%.
3.3. Quantum of Demand fluctuating because of the dependence upon the exports of raw gypsum to india which not only faces competition from Iran but also deeply affected by the India Pakistan border relations. The supply of gypsum uncalcined powder is dependent upon orders from Punjab for domestic use and exports to India. For gypsum crush, the supply is mainly directed to the mini cement factories of India through traders of Punjab. The detailed study of the gypsum value chain shows that annual procurement of gypsum from Kohat Division is 3.53 million tons.
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
Estimated Annual Rock Procurement by Local Processing: 2
The estimated rock demand within the Kohat Division is about 1.43 Million Tons. However this keeps highly fluctuating (increasing upto 2 million tons) because of the illegal operations by plaster of paris units from time to time, and the increased demand from exporters to India.
➢ Crush plants: 1,035,000 Tons ➢ Gypsum powder plants: 36,000 Tons ➢ Plaster of Paris plants: 233,442 Tons ➢ Cement factory: 130,000 Tons
Estimated Annual Procurement of Gyspum Rock by Processing sector outside Kohat Division
The demand for gypsum rock of cluster, outside the Kohat Division is 1.96 million tons.
➢ Plaster of Paris factories at Peshawar and Nowshera 117,600 Tons ➢ Cement factories of Baluchistan, Punjab and Sindh 1,540,000 Tons ➢ Gypsum Boards manufacturing 180,000 Tons ➢ Exports to India from Kohat Division: 124,800 Tons
3.4. Demand Trend
The bulky nature of gypsum and comparatively low prices has resulted in a global phenomenon that demand for gypsum handpicks and crush comes from nearest locations of processing industry.
The cumulative demand of gypsum by cement factories of Pakistan is 1.3 million tons. Later on during the early 1990s, with the establishment of gypsum powder, crush, and plaster of Paris factories additional demand of 1.7 million tons was created. In the year 2005, the commencement of gypsum boards production line by (Dong Feng Board) gypsum industries paved the way for gypsum value addition as per international best practices. Today the demand of gypsum board from 03 gypsum board units is 0.6 million tons. Finaly, the demand by India is 3.9 million tons. This makes the total demand to be about 7.5 million tons.
3.5. Key Market Segments
Supply of Gypsum products mainly depend upon the construction industry accounting for about 99% of the gypsum products consumption, and 1% goes to the agricultural farms of Punjab. Following are the Key Market Segments for gypsum of the Kohat Division:
2 Source: Random Survey of the Processing Sector, and Frontier Mine Owners Association
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➢ Mine Lumps: Cement Factories for Contraction Industry ➢ Gypsum Crush: ▪ Cement Plants of Cherat and Lakki Marwat ▪ Exporters of Punjab to India ➢ Gypsum Powder: ▪ Local Plaster of Paris Plants ▪ Agriculture farms of Punjab ➢ Plaster of Paris: Construction industry of Khyber Pakhtunkhwa and Punjab
3.6. Potential Niche Markets
Due to being quick to install and environment friendly, the dry prefabricated gypsum products is replacing the plaster and cement in global construction industry. With the advent of Gypsum Boards and Tiles to Pakistan’s construction industry, the production of these products started in the country. Potential niche markets and products are: ▪ Gypsum Boards: Housing schemes, and commercial plazas of the country ▪ Gypsum Tiles: As above ▪ High quality plaster for dental and orthopedic applications in Pakistan
3.7. Expected Growth of Cluster Products
The construction sector contributes 2.8% to GDP of Pakistan and growing with an average rate of 5.1%, this is estimated to reach 4% in the year 2025, that is, Rs. 1,763 Billion. Taking into consideration the growth rate of the construction industry, the CPEC, emphasis of government on construction of dams and housing schemes, and the growth rate of the cement industry dispatches, the cumulative domestic demand of gypsum from the year 2018 to 2025 is forecasted to be 37.5 Million tons.
FIGURE 14: PROJECTED CONSUMPTION OF GYPSUM IN PAKISTAN (MILLION TONS)
Gypsum in Cement Other Uses Total Gypsum 5.7 5.4 5.1 4.8 4.5 4.3 4.0 3.8 3.3 3.1 2.9 2.8 2.6 2.5 2.4 2.2 2.3 2.3 2.0 2.1 1.8 1.9 1.6 1.7
2018 2019 2020 2021 2022 2023 2024 2025
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
4. DEMAND AND SUPPLY GAP ANALYSIS - EXPORT MARKET
4.1. Analysis of Current Exports
The exports of Pakistan’s gypsum products for the year 2017, were around Rs. 1,450 Million. Gypsum anhydrite has a dominating share of 96.7% in the total exports of gypsum products. In the corresponding year, Pakistan exported a total of 0.24 Million Tons Gypsum Anhydrite worth around Rs.1,400 Million and remained among the top ten exporting countries with 9th position.
TABLE 19: PAKISTAN'S EXPORTS OF GYPSUM PRODUCTS Products Quantity (Tons) Gypsum Anhydrite 240,052 Gypsum Plaster 342 Gypsum Boards and Allied 1,890 Gypsum Tiles and Allied 210 Article of Plaster 4 Total 242,498
About 14% of the Gypsum produced in Pakistan is exported in simply crushed or powdered form. India has been the biggest importer for Pakistan with 99.5% of its total exports of the same product going to India.
TABLE 20: TOP 03 EXPORTERS OF GYPSUM ANHYDRITE TO INDIA Exporter Total Value Total Quantity Unit Value Paid by (Million USD) (Million Tons) India (USD/Ton) Oman 48.73 2.43 20 Iran 29.92 1.55 19 Pakistan 15.64 0.69 23
4.2. Analysis of Country wise Existing Demand
World’s total imports value of gypsum products is USD 3.7 Billion. Of this, the shares of different products are as given below:
Gypsum Anhydrite: 30% Gypsum Plaster: 14% Gypsum Boards: 34% Gypsum Tiles: 16% Other Articles of Plaster: 6%
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TABLE 21: TOP THREE IMPORTING COUNTRIES OF GYPSUM PRODUCTS
Importer Value Quantity
(Million USD) (Million Tons)
Gypsum Anhydrite
Indonesia 357.0 2.1 USA 90.2 4.9 India 82.2 3.9 Gypsum Plaster Nigeria 39.1 N/A Belgium 38.0 0.4 Netherlands 32.7 0.2 Gypsum Boards USA 130.2 0.46 France 106.7 0.44 Canada 84.9 0.45 Gypsum Tiles Switzerland 58.2 0.12 Canada 37.6 N/A France 29.4 0.09 Articles of Plaster USA 24.9 N/A Singapore 20.2 0.02 Saudi Arabia 15.9 0.01
The total demand of India for gypsum anhydrite is about 4.96 Million Tons + domestic production.
4.3. Demand and Supply Gap
World’s gypsum demand is increasing and the imports value is USD 0.8 Billion in excess to the exports. The gap is mainly due to the gypsum anhydrite, the imports of which are USD 0.5 Millions in excess to exports.
TABLE 22: WORLD' GYPSUM TRADE Product Exports Value Imports Value (Billions USD) (Billion USD) Gypsum Anhydrite 0.6 1.1 Gypsum Plaster 0.4 0.5 Gypsum Boards and Allied 1.1 1.3 Gypsum Tiles and Allied 0.6 0.6 Article of Plaster 0.2 0.2 Total 2.9 3.7
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The international gypsum products trade of Pakistan is given in terms of quantity. Currently the trade is in favor of Pakistan, with the exports exceeding the imports by 226,710 tons.
TABLE 23: PAKISTAN'S GYPSUM PRODUCTS INTERNATIONAL TRADE Products Exports (Tons) Imports (Tons) Gypsum Anhydrite 240,052 1,145 Gypsum Plaster 342 1,214 Gypsum Boards and Allied 1,890 7,286 Gypsum Tiles and Allied 210 826 Article of Plaster 4 5,317 Total 242,498 15,788
Total demand of gypsum was estimated to be 271 Million tons for the year 2017, against which the production was 263 Million tons, indicating towards the gap of 8 Million tons. By year 2025 the gap is estimated to widen with the global Gypsum demand having 10% growth rate will reach 870 Million Tons whereas the production to be around 620 Million Tons assuming growth rate of 3.6%.
The domestic demand of raw gypsum is forecasted to be 5.7 Million Tons in the year 2025. The country’s international demand and supply gap for gypsum products in terms of value will be 2.9 Million Tons.
TABLE 24: PAKISTAN'S INTERNATIONAL TRADE PROJECTION (YEAR 2025) Difference Product Exports (Tons) Imports (Tons) (Tons) Gypsum Anhydrite 4,752,766 13,764 4,739,002 Gypsum Plaster 6,771 333,990 -327,219 Gypsum Boards 37,420 1,368,152 -1,330,732 Gypsum Tiles 4,158 72,164 -68,006 Articles of Plaster 79 24,210 -24,131 Total 4,801,194 1,812,281 2,988,913
4.4. Expected Growth of Cluster
The previous trend combined with CPEC related activities will result in increased construction activities in Pakistan. On the basis of current activities the gypsum cluster is projected to stagnat at the current level. The implementation of proposed intervention may change the entire scenario by the year 2025. The focus should remain on the utilization of gypsum rock into highly profitable value added products rather than increased output from mines.
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
FIGURE 15: CURRENT VS PROJECTED SCENARIO OF THE CLUSTER
4.5. Potential Niche Market with Growth Trends
Given the total gypsum production, the percentage of gypsum going to boards and the gypsum consumption per unit, the global gypsum boards production is calculated to be 11.27 Billion Square Meters, and 24.16 Billion Square Meters in the year 2017 and 2025 respectively. By the year 2025, the market for gypsum board is expected to be around 30.7 Billion Square Meter reflecting the gap of about 4.54 Billion Square Meters.
Finally, for the year 2017, out of the total USD 25.45 Billion worth Global Ceiling Tiles market, the share of gypsum tiles was 16% with a value of USD 4.1 Billion and growing at a rate of 10.8%, this will reach USD 9.3 Billion in 2025.
TABLE 25: GYPSUM PRODUCTS' SHIFT OF CONSUMPTION Product Current Market Market Share by Share 2028 Cement 61% 42.5% Gypsum Boards 33% 42.5% Others 6% 15.3%
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
4.6. Key Requirements of Potential Market
Owing to the increased commercial activities in the advanced economies, the demand of prefabricated gypsum products will keep increasing. The potential markets requirements are as under:
4.6.1. Gypsum Anhydrite
➢ Cement industry’s key requirement is the gypsum anhydrite lumps and crush with purity above 80%. ➢ Plaster of Paris factories requires gypsum with purity above 80% and in white colour.
4.6.2. Calcined Gypsum
Calcined gypsum is the demoisturised gypsum powder with the following required specification:
TABLE 26: REQUIREMENTS OF GYPSUM BOARDS FOR PLASTER Chemical Composition Calcium Sulphate Hemihydrates CaSO4. ½ H20 Fineness 4 to 6% only remaining on sieve 200u Initial Setting Time From 3 minutes for speedo plaster to 10 minutes as per requirement Final Setting Time From 12 minutes for speedo plaster to 30 minutes as per requirement Compressive Strength Greater than 10.5 MN/m2 or 1,525 psi (pure plaster) Density 1100 kg/meter cube Thermal Conductivity 0.22 W/m. K (i.e. gypsum plaster’s insulation is about five times better than cement-sand plaster
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
4.6.3. Gypsum Boards
Gypsum boards is a product with calcined gypum dried within the two layers (upper and lower) of paper or fiber.
TABLE 27: KEY REQUIREMENTS OF GYPSUM BOARDS Product Application Abuse-resistant gypsum Greater resistance to surface indentation, abrasion and penetration panels than standard gypsum panels Eased edge gypsum board, As an aid in custom finishing of joints. Exterior gypsum soffit Undersides of eaves, canopies, carports, and other commercial and board residential exterior applications with indirect exposure to the weather. Foil-backed gypsum board Aluminum foil laminated to the back surface of regular gypsum board serve as vapor barriers Gypsum base As a base for thin coats of hard, high strength gypsum veneer plaster. Gypsum liner board As a liner panel in shaft walls, stairwells, chase ways, area separation fire walls, and corridor ceilings. It has a special fire- resistant core encased in moisture-resistant paper. Gypsum sheathing As a protective fire resistive membrane under exterior wall surfacing materials such as wood siding, masonry veneer, stucco and shingles. It also provides protection against the passage of water and wind and adds structural rigidity to the framing system. The noncombustible core is surfaced with water repellent paper; in addition, it may also have a water-resistant core. Impact-resistant gypsum Greater resistance to the impact of solid objects from high traffic panels and vandalism than standard gypsum panels Mold-resistant board Preventing the growth of mold and mildew on the board’s surface. Regular gypsum board As a surface layer on walls and ceilings. Sag-resistant board Offers greater resistance to sagging than regular gypsum products used for ceilings where framing is typically spaced 24 inches Type C or Proprietary In some fire rated assemblies. Additional additives give this Type-X gypsum board product improved fire resistive properties. Type X gypsum board Improved fire resistance made possible through the use of special core additives. Water-resistant gypsum Serves as a base for ceramic or plastic wall tile or plastic finish board panels in non-wet areas.
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
4.7. Analysis of Core Competing Products and Countries
About 99% of the cluster’s supply goes to the construction sector. In case of raw gypsum, the threat of competing product is negligible. It is actually on demand side that, globally the cement industry and gypsum boards compete with each other for procurement of crude gypsum. In both cases the demand of gypsum just switches from one sector to another. However in the advanced economies, the crude gypsum has to compete with synthetic gypsum for production of gypsum boards. The threat of synthetic gypsum is negligibly small in the developing economies like Pakistan.
The gypsum cluster of Kohat has to compete with the gypsum products of other countries.
FIGURE 16: PAKISTAN'S COMPETITORS Product Top Exporters of World Top Competitors Gypsum Anhydrite Thailand, Iran, Oman Oman and Iran Gypsum Plaster Germany, Thailand, Turkey Thailand, Oman, China, Iran, Bahrain, Saudi Arabia Gypsum Boards Mexico, USA, Thailand Oman, Saudi Arabia, UAE, China, Thailand, Belgium, Germany, France Gypsum Tiles Germany, China, USA China, Turkey, Tunisia, Egypt, Denmark, UAE, Singapore Articles of Plaster China, Malaysia, Saudi Arabia China, Malaysia, Saudi Arabia
4.8. Cluster’s Existing and Potential Competitiveness
The clusters’ current competitiveness lies in its strength of: ➢ Abundant gypsum reserves ➢ Using low cost local machinery ➢ Proximity to the expanding market of India for raw uncalcined gypsum ➢ Plaster of Paris factories and artisans for construction industry ➢ Ability to supply required quantity and quality of uncalcined gypsum to cement factories. ➢ Well established processing cluster near the mines on Bannu road.
Keeping in view the future demand and shift in product types to green products, the cluster must have to develop competitiveness in: ✓ Mechanized Mining for increased production ✓ Machinery upgradation at Plaster of Paris Units for energy efficiency and quality improvement. ✓ Establishment of gypsum boards and tiles processing units ✓ Environment friendly operations
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
4.9. Major Drivers of Success or Failure
The thumb rule for gypsum products is the establishment of gypsum processing units in the nearest areas of mining, because globally the prices of crude gypsum are low. In Pakistan, the cost of transportation to buyers of crude gypsum is 70% of the procurement value. For example, the transportation may cost Rs. 500 to 2,500 per ton for the crude gypsum of worth Rs. 350 per ton at mine. Therefore the smaller the distance between mines and processing units, the higher will be the profit margin.
The labor intensive small scale mining is gradually becoming non viable due to lowest profit margins. Mine mechanization will be the key success factor in the near future.
For gypsum crush and powder units, the availability of electricity is essential. Similarly, in case of the Plaster of Paris and Gypsum Boards processing units the thermal energy for kilns/furnaces plays decisive role in setting the profit margins. The source of this energy, and efficiency of kilns may reduce the operational costs of Plaster and Gypsum units manifolds.
Further the gypsum boards also depend upon the best possible target market country with high demand and higher prices per unit.
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
5. CLUSTER GAP ANALYSIS IN THE LIGHT OF INTERNATIONAL BEST PRACTICES
Several developed countries following the basic definition of economics, consider the mining as primary industry. In the gypsum mining and processing sector, initial crushing is done in the mining area after which the crush is shifted to the processing zones for further processing. The focus of these countries remains on the value addition rather than export of crude gypsum. For this, policies are formulated accordingly so that to ensure optimum value addition, improved infrastructure, modern machinery and techniques, compliance to labor laws, access to finance and environment friendly mining and processing.
5.1. Mining
5.1.1. Infrastructure
In the countries with successful mineral sectors the state first provides basic road network, electricity, gas, water and communication and then allot the lease in that particular area. In Chile and Peru the private sector develops mine access roads and the amount incurred on these roads is deducted from the royalty.
FIGURE 17: MINING INFRASTRUCTURE IN IRAN
As compared to the international best practices, the mining cluster of Kohat Division has flourished by the virtue of being located on the main highways. Mine access roads have been developed by the private sector on self-help basis. Electricity is not available in mining areas
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
and the mine owners have to arrange water by themselves. Telecommunication is in shape of the mobile phone network which still is problem in many far flung areas.
FIGURE 18: MINES TO MAIN ROADS IN KOHAT DAVISON
FIGURE 19: MINE ACCESS ROAD IN KRAPA, KOHAT DIVISION
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
5.1.2. Technology
The gypsum mining of advanced economies is done with the help of heavy earth moving machineries.
FIGURE 20: SURFACE MINING- TECHNOLOGY AT GYPSUM MINES OF OMAN
FIGURE 21: SUB SURFACE GYPSUM MINING IN FRANCE3
A compact machinery, for example, the Vermeer terrain leveler has recently been introduced by few manufactures, which is capable of excavating the gypsum rock in small crush shape
3 Photo Credit: www.gettyimages.com
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
and eliminating the need of blasting at mine and the need of primary crushing unit.
In the developing countries, gypsum mining relies upon the drilling and blasting. The gypsum cluster of Kohat has the same practice, so the second hand equipment, like drills and air compressors are used. Though crushing is still done manually at several mines but due to the higher costs and lower production the trend of using second hand hammer machinery has also gained popularity.
FIGURE 22: VERMEER TERRRAIN LEVELER FOR GYPSUM MINING
Small Scale Mining
Majority of the mine owners are of small scale and rely upon the manual drilling and blasting techniques, and labor intensive tractor trolley loading. The startups normally use hand operated drills.
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
FIGURE 23: PRIMITIVE HAND DRILLING FOR EXPLOSIVES
A comparatively advanced mine uses pneumatic hand held drill machine with second hand air compressors backup.
FIGURE 24: DRILLING FOR EXPLOSIVES- PNEUMATIC DRILLS
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
FIGURE 25: MANUAL LOADING AT MINES
Medium Scale Mining
These units utilize heavy earth moving machinery for excavation, jack hammering, and then loading on trucks.
FIGURE 26: GYPSUM EXTRACTION AT MECHANIZED MINE OF KOHAT DIVISION
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
FIGURE 27: GYPSUM LOADING AT MECHANIZED MINE- KOHAT DIVISION
5.1.3. Human Resource
In the developed countries the state of the art public and private sector technical training institutes providing training in scientific mining practices, drilling, machinery operations, quarry management and etc. In comparison to this, the gypsum cluster of Kohat has no such institution and only on job training is provided.
In contrast to the developed countries labor force throughout the value chain is either totally illiterate or with education below middle school. There is no concept of hiring technically qualified worker with some sort of diploma or technical education. Mining engineers are though hired due to the regulations of Mines and Minerals Department but very few of them remain present on the sites due to lack of facilities and motivation.
5.1.4. Access to Finance
In the countries with well developed mineral development sector provides multiple banking products are available for financing the mining activities particularly technology. In these countries mine itself is used as collateral to avail bank finance, secondly there are dedicated warehouses where the mine product is accepted as collateral for bank loan. Another important financing facility in these countries is debt financing. Other common financing options available for mine owner are; assets based finance, royalty based finance and income stream based finance.
As per the common situation in Pakistan, mine lease is not considered as collateral. The mine lease holders of Kohat Division are mostly the entrepreneurs of the nearby areas or districts with a weak financial position. They start mining with smallest capital and borrowing from friends. Their houses are also located in the villages and very weak assets to be considered for mortgages.
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
5.2. Processing
The cluster under review though developing but still far behind the international best practices in terms of technology. Collectively, the cluster needs upgraded technology with energy efficient and environment friendly machinery and equipment.
5.2.1. Infrastructure
As most of the minerals are weight losing goods so, throughout the world, it’s a common practice to establish processing zones in proximity to mining areas. Especially in gypsum sector the processing units exist nearest to the gypsum mines areas. For example, the gypsum boards factories of USA are located on the borders of Mexico and Canada.
The concept of developing Industrial Zones/Estates with facilities of processing, polishing, packaging, machinery manufacturers, machinery repairing workshops near mining hubs is also becoming a successful model. In the developed countries, and even Iran, primary crushing is done at mine sites, which not only confines most of the dusty operations to remote mountainous areas but also ensure increased profit margins.
FIGURE 28: CRUSHING AT GYPSUM MINE OF WHITE MESA, SANDOVAL COUNTY- USA4
In the Kohat Division, the processors while adhering to the global gypsum business principle and for profit optimization, try to establish the gypsum crush, powder, and plaster units nearest to the mine sites. However, all of the processing activity has been developed by the individual decisions of the business owners alongside the highways, and the dedicated processing zones do not exist.
4 Photo Credit: geoinfo.nmt.edu
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
5.2.2. Technology
As per the international best practices in countries like Canada, the primary crushed rock at mine site is sent to the cement factories or gypsum plasters and boards processing industries. The concept of open air crushing or powder processing is totally discouraged. Latest processing machinery is used to ensure the productivity and energy efficiency.
The processing of Kohat cluster is dominated by the use of locally manufactured machinery, which is though of lower cost but lags far behind in terms of productivity, quality, and HSE (Health, Safety, and Environment) aspects.
Gypsum Powder Units
The gypsum powder units of countries like China, are designed to ensure environment friendly operations, wastage reduction, and quality products.
FIGURE 29: GYPSUM POWDER INDUSTRY OF CHINA
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
FIGURE 30: GYPSUM POWDER PLANT BY HENAN LIMING HEAVY INDUSTRY SCIENCE & TECHNOLOGY CO.
These are simplest units with only one syndicator and conveyor belts where loading and unloading is done manually. The crushing machinery and conveyor belts used are locally manufactured. Normally, these machines are placed in open without any shed or boundary wall resulting in air pollution with around 150 Kg of powder per ton of gypsum crushed.
FIGURE 31: GYPSUM POWDER UNIT AT KRAPA, KOHAT DIVISION
Gypsum Crush Plants
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
The gypsum crush plants of the entire world operate in the open air crushing of rock. Therefore, in most of the countries primary crushing is performed in the mining area.
FIGURE 32: GYPSUM CRUSH AND POWDER PLANT AT IRAN
Gypsum crush plants are the medium scale business with an average investment of Rs. 6 Million. These units crush the hand pick and through jaw crusher and then with the help of conveyor belts and sieves, separate them into different sizes from 1 inch to 5 inch. Like the gypsum powder units, the crush plants are also installed in open air, therefore having the same problems of wastage and environmental pollution.
FIGURE 33: GYPSUM CRUSHING IN KARAK, KOHAT DIVISION
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
FIGURE 34: GYSPUM CRUSH SIFTING
FIGURE 35: LOADING ON CRUSH PLANTS, KOHAT DIVISION
Gypsum Plaster (Plaster of Paris) Plants
The hemihydrate (Plaster of Paris) production plants in the leading countries is done in energy efficient manner through latest machinery also complying with environmental regulations. The situation is far better in our neighbouring countries of India and Iran.
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
FIGURE 36: PLASTER OF PARIS PRODUCTION LINE BY PRECIOUS GROUP- INDIA
In Kohat Division, such units are equipped with syndicators for crushing gypsum lumps into powder and then this powder is semi automatically conveyed into the furnaces for calcination. After calcination, the powder is ground into fine mesh and finally packed. Labor is engaged in five stages as:
1. Crushing the handpick to sizes suitable for grinding in syndicator. 2. Loading the powder into furnaces from syndicator pit. 3. Loading the powder from furnaces into grinding machine. 4. Packing the powder into bags. 5. Loading the bags on trucks.
FIGURE 37: PLASTER OF PARIS PLANTS- KOHAT DIVISION
These units totally rely upon the thermal energy for use in furnaces while only 4 units have gas connections. Majority of other units use coal, and some also use wood for heating their
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
furnaces. Furthermore, due to the manual loading in open environment, the wastage is 250 Kg per 30 tons.
5.2.3. Human Resource
In rest of the world, the processing industries abide by the labor laws and in most of the countries the hourly wage rate for labor is practiced. Social security, and safety of the processing labor is the responsibility of employers which is practiced in the advanced economies but in countries like Pakistan, employers least bother about such things.
The situation of Gypsum cluster of Kohat is organizations is unfavorable for both of the employees and the employer. In almost all of the gypsum processing units, the contractor is responsible for managing labor on the basis of rupees charged per bag. This is though an attraction for the business owners but the implementation of labor laws are nonexistent in the cluster and long term affiliation of the employees is also a problem due to this factor.
5.2.4. Access to Finance
The processing units of the top gypsum producing countries are normally located in costly processing zones, therefore prove to be strong collaterals for financing from formal channels. In contrast to this, the mineral processing industry of Kohat cluster is established on inherited lands with lowest rates, which remain to be of lowest worth to be considered by banks for financing.
6. KEY ISSUES
6.1. Regulatory
Mining
1. Illegal mining in shape of subletting and forced occupation based mining by local communities result in massive under reporting of the production. Not only loss to the investors but also to the government exchequer. 2. Taxation a. In 2015 the royalty was at once increased from Rs. 10 to 30 per ton b. All minerals are treated alike while levying taxes or royalty 3. Increase in Renewal Fee a. Earlier as per the Mineral Concession Rules, Rs. 13,000/ but after 2017 it is Rs. 100,000/ 4. Heavy fines are charged. A that are above Rs. 50,000/ making it unviable 5. Lease: a. The Mining Policy/Act: Work on 200 acres and surrender the remaining area. b. Lease renewal is delayed by department and then cancelled on account of non- renewal
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
6. Explosive License: a. Takes several months in issuing b. Daily limit of explosives reduced from 25 Kg to 5 Kg 7. Inter departmental conflict between the DGMM and Forest Departement over land 8. Cluster complains of being neglected in the formulation of Mining Act. 9. Many death cases pending at the Workers Welfare Board Peshawar 10. The clause of surface rent in the Minerals Act termed to be ambiguous. There is no mention of the rate or the clarity about the disputes between the property owner and lease owner. 11. Noncompliance of labor laws relevant to marriage and death grants of up to 300,000/
Processing
1. Procedures for registration with industries department are not clear 2. NOC from EPA is time consuming 3. Security Deposit for Gas connections is Rs. 6 Million due to which the plaster factories either opt for coal fired heat source or gas theft as high as Rs. 1.3 Billion per year. 4. Gypsum uncalcined powder factories highly dependent upon the uncertain export orders to India, therefore making the businesses to be confined to the roadside open area single syndicator based operations. 5. Open area crush plants due to being located near the residential areas face threats of closer on account of environment pollution.
6.2. Infrastructure
Mining
1. Poor condition of mine access roads cause mine access blockade in rainy weather and unwillingness of the transport even in normal weather when they have supplies other than gypsum 2. Unavailability of electricity and water makes the operations of crush plants nonviable in the mining areas.
Processing
1. Electric Power unavailability 2. Unavailability of Gas connections: Only 8 factories out of 130 have gas meters 3. Gypsum powder processing units away from mines are less profitable
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
6.3. Technology
Mining
1. Rental based Heavy Earth Moving Machinery results in lower profit margins for mine owners.
Processing
1. Inefficient locally manufactured small scale plaster plants result in low productivity and low profitability
6.4. Financing
Mining
1. Unavailability of Loan for Lease Holders
Processing
1. Weak Financial condition of processors
6.5. Marketing
Mining
1. Reliance upon conventional markets of cement factories and exports to India limits the prospects and cause lower prices stagnating for a long period.
Processing
1. Gypsum crush: Heavily dependent upon the domestic cement factories with very low prices. Similary in case of exports the only market is that of India. The transporters are given very short time to return whereas they have to queu up for long time at customer sites. 2. Low prices of plaster products in domestic construction industry.
6.6. Social
Mining
1. Hinderances caused in mining activities by local communities. 2. Unavailability of facilities for mine workers, namely, school, colony, hospital, and transport.
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
3. Over staffing in Working Folks Grammar Schools has resulted in burden on workers welfare funds. 4. The admission of children of non workers in the workers schools. 5. Admission procedure of the workers children is complicated. The EOBI office exist only in Kohat and there is no office of Worker Welfare Board
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
7. PROPOSED INTERVENTIONS
7.1. Regulatory
7.1.1. Ammendments in Mineral Policy
Despite huge mining and processing activity, the contribution of gypsum cluster of Kohat to the provincial and federal revenues is negligibly small. Similarly, the cluster has sever social and environmental issues.
Required Interventions
There is a need to bring the cluster in provincial streamline with the following:
➢ Issue of illegal mining to be solved by mutual dialogue of the concerned public and private sector. ▪ For ptimum mining activity, the mine leases to be allotted after ensuring the financial soundness, experience, expertise, and business plan of the applicant. ▪ To eliminate the occupation of mines by local communities, there should be a provision of allowing a certain portion of mine leases to be legally subletted. ➢ Existing mine owners are resisting the implementation of the mineral act’s clause related to the surrendering of land over 200 acres. ▪ The existing mine owners should be exempted from the surrender of land in access to 200 acres, as they plead to have acquired the lease before the law. In return, these mine owners may be asked to guarantee time bound mining activity and come up with a plan of optimum land utilization within justified time period. ▪ The clause of land not exceeding 200 acres to be applicable to new applicants. ➢ Rationalize the royalty on the basis of the worth of the mineral. ▪ For gypsum it should not increase Rs. 15 per ton. ▪ The increase in royalty to be slow and gradual. ➢ Decide slabs for charging penalties as per the nature and intensity of violation, in consultation with mine owners. ➢ On the basic principles of economics and role model of the developed countries, mining to be declared as primary industry, so that ensure ▪ Provision of basic infrastructure to the primary crushing within the mining area ▪ Bring the mining and initial crushing units into tax net ▪ Paving way for compliance with social and environmental regulations ➢ Allocating the budgets on the basis of royalty for ▪ Infrastructure development ▪ Interest free loans to the mine owners and crush units for upgradation ➢ Efficient implementation of labor laws for ▪ Workman compensation ➢ Efficient and empowered committees backed by dedicated mineral majestrate for ▪ Mines dispute resolutions
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
Responsibility
The Mines and Minerals Development Department of Khyber Pakhtunkhwa in consultation with: ❖ Forestery, Environment, and Wildlife Department ❖ PMDC ❖ SMEDA-Khyber Pakhunkhwa ❖ Labor Department
Required Budget for Intervention
This particular intervention requires about PKR 01 million for travelling of officials, stakeholders consultations, communication, and printing.
Benefits of the Intervention
The intervention is aimed to ensure:
➢ Legal mining ➢ Increased number of modern mines ➢ Reduce envrironmental hazards ➢ Social uplift and mainstreaming of the local communities
7.1.2. Ammendments in Industrial Policy
Required Interventions
➢ Reduction or waiver of Security Deposit for Gas connections ➢ Registration process with industries department to be transparent and quick ➢ Easy and quick process for obtaining NOC from EPA
Responsibilty
Industries department in consultation with: ❖ Gypsum processors ❖ SMEDA-Khyber Pakhunkhwa ❖ Labor Department-Khyber Pakhunkhwa
Required Budget for Intervention
This particular intervention requires about PKR 01 million for travelling of officials, stakeholders consultations, communication, and printing.
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
Benefits of the Intervention
The intervention is aimed to ensure:
➢ Increased investment in the processing sector ➢ Formally registerd processing industry ➢ Compliance with the environmental regulations ➢ Labor laws and social welfare compliance
7.2. Infrastructure
7.2.1. Mines Access Roads for Mine
Required Interventions
➢ 80 Km Mine Access Roads Development ▪ 40 Kms alongside old Bannu Road ▪ 20 Kms alongside Main Indus Highway ▪ 20 Kms alongside Rawalpindi Kohat Road
Responsibilty
Mines and Minerals Development Department of Khyber Pakhtunkhwa
Required Budget for Intervention
Total budget of PKR 1,600 will be required for the purpose
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
7.2.2. Establishment of Gypsum Processing Zone
Required Interventions
➢ Establishment of Gypsum Processing Zone on Old Bannu Road over 200 acres with one window facilitation service
Responsibilty
Industries Department of Khyber Pakhtunkhwa
Required Budget for Intervention
Total budget of PKR 2.9 Billion will be required for the purpose, as:
TABLE 28: DETAIL OF GYSPUM PROCESSING ZONE S. No. Task Cost (Million Rs.) 01 Acquisition of Land- 200 Acres @ Rs. 04 million/acre 800 02 Development- 30% Service Area (60 acres) @ Rs. 01 million/acre 60 03 Electricity Provision- 28 Mw 400 04 Gas Provision 840 05 Water Supply and Severage 300 06 Bounday Wall 350 07 Office Building 20 08 Labor Complex (500 Persons Accomodation)- 38,000 Sq. Ft 76 09 Masjid and Dispensary 20 09 Running Expenses 20 Total 2,886
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
7.3. Technology
7.3.1. Machinery Pools for Mining
Required Interventions
With ever increasing difficulties in obtaining the explosives for mining, the miners of the clusters are gradually switching to the heavy earth moving machinery but currently they are facing difficulties these from Tharnol and the Karak market.
Two (02) machinery pools are required as ▪ 01 for Karak ▪ 01 for Kohat
Responsibilty
Mines and Minerals Development Department of Khyber Pakhtunkhwa
Required Budget for Intervention
Total budget of PKR 1,530 will be required for the purpose as under:
TABLE 29: DETAIL OF MACHINERY POOL S. No. Required Interventions Estimated Cost (Million Rs.) 10 number of shovel/loaders (950)- @ Rs. 01 15 Million/Unit for Karak 300 10 number of shovel/loaders (950)- @ Rs. 15 Million/Unit for Kohat 02 15 number of air compressors (250 PSI)- @ 180 Rs. 06 Million/Unit- Karak 15 number of air compressors (250 PSI)- @ Rs. 06 Million/Unit- Kohat 03 15 number of excavators with buckets and 1,050 jack hammers- @ Rs. 35 Million/Unit- Karak 15 number of excavators with buckets and jack hammers- @ Rs. 35 Million/Unit- Kohat Total 1,530
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
7.3.2. Establishment of Gypsum Processing Factory on International Standards
Required Interventions
The proposed project will have a total investment of PKR 1.4 to 1.6 Billion. It will also be backed with complete on-site gypsum processing plant capable of utilizing its gypsum rock into:
➢ Gypsum Plaster of Paris of High Quality: 94,000 Tons per Year ➢ Gypsum Boards: 06 Million Square Meters per Year
(Please find attached the detailed quotations for reference)
Responsibilty
Private sector to be encouraged to invest in this project once the gypsum processing zone is commenced.
Cost of the Intervention
TABLE 30: DETAIL OF GYPSUM PROCESSING FACTORY S. No Cost Heads Total Cost (Million PKR) 1 Land (05 Acres) 20 2 Infrastructure (Factory, Labor Hostels, others) 580 3 Machinery & Equipment (Processing) 600 4 Preliminary Expenses & Project Management 70 Total Project Cost 1,270
Benefits of the Project
The project will provide employment to about 200 people by ensuring value addition and revenue generation.
TABLE 31: REVENUE STREAM OF THE PROJECT S. No Revenue Heads Estimated Revenues (Billion PKR) 1 Gypsum Boards 8.00 2 Gypsum Tiles 0.05 3 Gypsum Plaster 0.05 4 Gypsum Powder 0.01 Total 8.11
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
7.4. Financing
7.4.1. Financial Support to Mining Sub Sector
Required Interventions
The gypsum mines like other minerals are not considered by banks as collatorals. Even if it is considered the mine owners will not apply for conventional bank loans due to religious point of view involved with the interest factor. This is cross cutting with the issue of the forceful takeover of mines by locals.
In order to assure the local investment in legal mining, the interest free loans out of the royalty may be initiated.
Responsibilty
Mines and Minerals Development Department of Khyber Pakhtunkhwa
Cost of the Intervention
TABLE 32: DETAIL OF INTERVENTION Required Interventions Estimated Cost (Million PKR ) Creation of funds for loans from the collected Royalty to support 70 Mines @ Rs. 10 Million per Mine. (out of Rs. 20 700 Million per Mine)
Benefits of the Project
The project will help in upgradation of 70 mines by the year 2025
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
7.4.2. Upgradation Support to Processing Sub Sector
Required Interventions
The use of substandard local kilns for plaster of Paris manufacturing results in low productivity, quality issues, energy wastage, and environment pollution. Encouragement of the plaster of Paris processors is needed by providing matching grants or interest free loans to them.
Responsibilty
Mines and Minerals Development Department of Khyber Pakhtunkhwa
Cost of the Intervention
TABLE 33: DETAIL OF INTERVENTION Required Interventions Estimated Cost (Million PKR ) 100 Large scale plaster producing automated plants. Rs. 100 Million per plant (Out of Rs. 20 Million per plant) 10,000 From Royalty of the minerals to support 50 local mine owners for establishment of crush plants in mining Area: Rs. 05 Million per plant (Out of Rs. 01 Million per plant) 250 Total 10,250
Benefits of the Intervention
Adoption of modern kilns will help the procssors operate cost effectively and efficiently to produce quality products for better markets and prices.
7.5. Formulation of Marketing Strategy
Required Interventions
The public and private sector should sit together to formulate policy of promoting the right product for right market. The export marketing of raw gypsum to be totally banned and the value added products to be supported by marketing support.
Responsibilty ➢ Frontier Mine Owners Association ➢ Industries Department Khyber Pakhtunkhwa ➢ Mines and Minerals Development Department of Khyber Pakhtunkhwa ➢ SMEDA ➢ TDAP
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
Cost of the Intervention
This particular intervention requires about PKR 01 million for travelling of officials, stakeholders consultations, communication, and printing.
Benefits of the Intervention
Increased profitability of the cluster and revenues for the provincial and federal governments
7.6. Social
Required Interventions
➢ Establishment of Hospitals for Mine workers ➢ Workers Welfare Fund ➢ Labor colonies to established at Karak, Krapa, Speena, and Kohat (cost mentioned in the gypsum ➢ Houses in worker colonies should be evacuated from influential people and allotted to workers only ➢ Establishment of EOBI and Worker Welfare Board offices on district level ➢ For the admission of worker’s children to Working Folks School, the verification of candidates file should be the responsibility of the school
Responsibilty
➢ Mines and Minerals Development Department, Government of Khyber Pakhtukhwa
Cost of the Intervention
Already covered in the Gypsum Processing Zone’s Costing
Benefits of the Intervention
Social uplift of the workers families
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
8. Economical, Social, and Environmental Impacts
8.1. Economic Impacts
The support of government and progressive role of private sector will increase the overall productivity and profitability of the Gypsum cluster of Kohat Division by following means: ✓ Increased production from existing mines ✓ Increased number of mines ✓ Increased revenue, decreased operating costs, and hence higher profits for the existing as well as new mines ✓ Establishment of crushing units at mine sites will reduce the transportation cost for them, and hence better profit margins. ✓ Modern energy efficient powder and plaster processing units to reduce the energy costs for SMEs, and through better quality enable them to get access to markets with higher price offer. Overall increased profitability for these units. ✓ Establishment of three in one, Gypsum powder, plaster, and Boards processing units in the processing zone for greater profits. ✓ Strengthening and expansion in aligned and service industry including hotels and restaurants, grocery stores, commercial plazas, housing schemes, service stations, CNG stations, and petrol pumps.
8.1.1. Individual Impact on SMEs
A conventional labor intensive gypsum quarry of Kohat Division, earns an average revenue of Rs. 3.1 Million per year. The operating profit margin remains around 44% with a profit of Rs. 1.3 Million per annum only.
Use of modern machinery enables the Gypsum quarry to increase its annual production by a minimum of 14 times, that is, 111,600 Tons of additional gypsum per year. With average price of Rs. 370/ton at mine the additional annual revenues of mine are Rs. 41.3 Million whereas the total saving from mining and loading activities are Rs. 18.5 Million. The net effect of the increase in quantity and decrease in operating cost enables a quarry to earn additional Rs. 59.8 Million per year. In total, the annual production of 120,000 Tons gypsum fetches Rs. 44 Million and Operating Profit of Rs. 38 Million (that is 95.5% of revenues).
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
TABLE 34: ECONOMIC IMPACT-UPGRADATION OF A SINGLE QUARRY Existing Situation (Single Mine) Modern Machinery (Single Mine) Labor Intensive Mining Mining with Excavator-EX 200 Production: 04 Labor mine 28 Tons/Day Production: 400 Tons/Day Working Days/Year = 300 Working Days/Year = 300 Annual Production/ Year = 8,400 Tons Annual Production/ Year = 120,000 Tons Cost of Mining: Rs. 172/Ton Cost of Mining: Rs. 29.5/Ton Post Intervention Benefits- Quarrying Increased Annual Production: Additional 111,600 Tons Per Ton Cost Saving: Rs. 142.5/Ton means Rs. 17.1 Million saving for 120,000 Tons Labor Intensive Loading at Mine Loading with Excavator-EX 100 at Mine Loading: 04 Labor mine 28 Tons/Day Loading: 448 Tons/Day Working Days/Year = 300 Working Days/Year = 300 Annual Loading/ Year = 8,400 Tons Annual Loading/ Year = 134,400 Tons Cost of Loading: Rs. 36/Ton Cost of Loading: Rs. 24/Ton Post Intervention Benefits- Mine Site Loading Increased Annual Loading: Additional 126,000 Tons Per Ton Cost Saving: Rs. 12/Ton, means Rs. 1.6 Million Savings for 120,000 Tons* * 120,000 tons is considered on the basis of the gypsum production at mine
TABLE 35: ECONOMIC IMPACT- MECHANIZATION OF STOCKING YARD Existing Situation (Single Stocking Yard) Modern Machinery (Single Stocking Yard) Labor Intensive Loading at Yard Loader B 950 at Yard Production: 8 Tons/Day Production: 176 Tons/Day Working Days/Year = 300 Working Days/Year = 300 Annual Loading/ Year = 2,400 Tons Annual Loading/ Year = 52,800 Tons Cost: Rs. 79/Ton Cost: Rs. 13.5/Ton Post Intervention Benefits of B 950 Increased Annual Production: 50,400 Tons Per Ton Cost Saving: Rs. 65/Ton and Rs. 3.3 Million per Year
Establishment of gypsum crush plants in mining area will reduce about 20% of the operational costs for each plant.
Similarly, the conventional gas operated plaster plants with 02 kilns normally have installed production capacity of 50,000 Tons per year and those of wood or coal operated plants is 20,000 Tons per year. With introduction of modern technology, not only the production will increase but the energy cost will also reduce.
Finally, the gypsum boards factory with about 5 Million square meter and 50,000 Tons of Plaster, normally earns a revenue of over Rs. 4 Billion per year. While being established within 50 Kms of the mining areas, the transportation costs for a gypsum production plant can be reduced by 40 to 50%, and as already explained, for gypsum products, this will be a huge saving.
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Cluster Study –Gypsum Mining & Processing- Kohat, Khyber Pakhtunkhwa
8.1.2. Impact on overall Cluster
Combined total impact of the interventions will be in the shape of increased number of SMEs, direct employments, development of businesses other than the gypsum sector, and environment friendly projects.
8.2. Environmental Impacts
The negative environmental impacts of the cluster would be reduced through the following interventions:
➢ Restriction of mining and processing activities to certain areas ➢ Confinement of processing activities inside the buildings will help in controlling the air pollution. ➢ Green products as per the international standards and trends ➢ Reduced contamination of water ➢ Trend of using products to safeguard against climate changes
8.3. Social Impacts
➢ Direct employment to about 5,190 people: ➢ Better socio economic conditions of local people, and the labor ➢ Social uplift due to increased skill oriented jobs ➢ Bringing the local communities into mainstream of industrialization ➢ Improved safety and hygiene of the mining and industrial employees and local communities ➢ Increased job opportunities
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8.4. Key Economic Indicators Analysis
8.4.1. Contribution to GDP
Current contribution of the Kohat Division’s Gypsum cluster is PKR 2.31 Billion per year. After the proposed interventions this contribution is estimated to the PKR 14.48 Billion per year.
8.4.2. Economic Rate of Return on Investment
With the total cost of intervention to be PKR 17.99 Billion the net economic rate benefit will be PKR 42.5 billion.
8.4.3. IERR, Payback Period, and Net Present Value
➢ IERR: 24% ➢ Net cost benefit ratio: 0.82 ➢ PV of economic benefits: 112.8
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9. Additional Inforamtion
ANNEXURE-I: Record Note of Gypsum Kohat Cluster FGD
FGD: Cluster Development Based Mineral Transformation Plan – V2025”
Venue: Shaban Hotel, Karak Dated: August 07, 2018
Agenda: To discuss about the issues faced by the Gypsum Kohat cluster, and required interventions
The Vision 2025 aims to improve Pakistan’s competitiveness in commodity producing sectors through cluster based development through building collaborations among private firms, the government, and academic & research institutions. In line with the vision 2025, Planning Commission, Ministry of Planning, Development & Reform have engaged Small and Medium Enterprises Development Authority (SMEDA) to undertake a comprehensive Research/Feasibility Study on Cluster Based Mineral Sector Transformation Plan. This comprehensive study is aimed to assess complete value chain study of selected mineral across 20 potential clusters in three sub sectors; mining, processing & tradingfor further development of mineral sector to international standards.
After preliminary meetings, presentation of the inception report, and field surveys, the first Focus Group Discussion was arranged at Shaban hotel, main Indus highway, district Karak with the gypsum stakeholders.
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Pictures of the Meeting
Discussion
The meeting formally started with recitation from holy Quran and was followed by introduction session. Mr. Abdul Qayyum (Member PSC) said welcome to all participants and introduced the purpose of the meeting.
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ANNEXURE-II: SMEDA OFFICES’ ADDRESSES
Small & Medium Enterprises Development Authority (SMEDA), Ministry of Industries & Production, Government of Pakistan www.smeda.org
Head Office
4th floor, 3rd Building, Aiwan-e-Iqbal Complex, Edgerton Road Lahore Tel: (042) 111-111-456 Fax: (042) 36304926-27 Help Desk: [email protected]
REGIONAL OFFICES
Baluchistan: Bungalow No 15-A, Chaman Housing Scheme Airport Road Quetta Tel: 081-2831623-2831702, Fax: 081-2831922
Khyber Pakhtunkhwa: Ground floor, State life building The Mall Peshawar Tel :091-111-111-456, 091-9213046-7 Fax 091-5286908
Punjab: 3rd floor, 3rd building, Aiwan-e-Iqbal Complex Edgerton Road Lahore Tel: 042-111-111-456, Fax: 042-36304926, 36304927
Sindh: 5th floor, Bahria Complex II, M.T. Khan Road Karachi Tel: 021-111-111-456, Fax 021-35610572.
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REGIONAL BUSINESS CENTERS
KHYBER PAKHTUNKHWA
Abbottabad Contact Person: Mr. Jabbar Ali Address: Office # 6 Al-Haaj Ashraf Plaza Mansehra Road Supply Abbottabad. Tel: 0992-400190, 0342-9533694 Email: [email protected]
Dera Ismail Khan Contact Person: Mr. Asim Rashid Address: 1st Floor State Life Building East Circular Road Dera Ismail Khan Tel : ( 0966)-716266, 0301-5862266 Email: [email protected]
PUNJAB Lahore Contact Person: Mr. Muhammad Ijlal Address: Lahore Chamber of Commerce & Industry – 11 Shahrah-e-Aiwan-e-Tijarat Lahore. Tel : ( 042)-111 222 499 (Ext. 348) , (042)-36282842 Fax : ( 042)-36368854, Email: [email protected]
Faisalabad Address: Faisalabad Chamber of Commerce & Industry – FCCI Canal Park, East Canal Road Faisalabad.
Gujrat Contact Person: Ch. Rukhsar Ahmad Address: Gujrat Chamber of Commerce & Industry GTCCI Building Near National Furnishers G.T.Road ,Gujrat Tel : ( 053)-3706116, Fax :( 053)-3706112, Email: [email protected]
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Gujranwala Contact Person: Mr. Asim Malik Address: Gujranwala Business Centre Trust Plaza G.T. Road, Gujranwala Tel : ( 055)-3734600, 0332-8331998 Fax : ( 055)-9200968, Email: [email protected]
Sialkot Contact Person: Mr. Ubaid ur Rehman Address: Sialkot Chamber of Commerce & Industry – SCCI Shahrah-e-Aiwan-e-Sanat- o-Tijarat Sialkot Tel : ( 052)-4261881-2, 0333-8364399 Fax : ( 052)-4268835, Email: [email protected]
Rawalpindi Contact Person: Mr. Asghar Nasir Address: Rawalpindi Chamber of Commerce & Industry Chamber House-39 ,Civil Lines, Mayo Road, Rawalpindi Tel : ( 051)-9273019, 9273020, 0345-8322898 Fax : ( 051) – 5111055, Email: [email protected]
Multan Contact Person: Ms. Sana Niaz Burrana Multan Address: C/o Office of DO (E-IP) Near Circuit House District Jail Road,Multan Tel:(061)9239300,0300-702601 Fax :( 061)-9201176, Email: [email protected] Rahim Yar Khan
Address: TBA, Rahim Yar Khan Chamber of Commerce Building Near Coca Cola Factory Shahbaz Pur Road Rahim Yar Khan
Sargodha Contact Person: Mr. Muhammad Ali Rana Address: House no. 2 Main PAF Road Sargodha
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Tel: 048-9230834, 0320-8588950 Email: [email protected]
SINDH
Dadu Contact Person: Mr. Hafeez Ahmad Jotoi Address: House No. 996 VIP Road Near Liaquat Jatoi House Dadu Tel: (025) - 4711633, 0333-7063633 Email: [email protected]
Gotki Contact Person: Mr. Raza Muhammad Mehar Address: DDO Revenue Building Station Road,Ghotki Tel: (072) - 3680233, 0300-2572655 Email: [email protected]
BALOCHISTAN
Hub Address: SMEDA RBC, LIEDA Office Building, HITE Hub, Lasbela Tel: 0853-310142, Fax: 0853-302827, Email: [email protected]
Gawadar Address: SMEDA RBC, Room #:201, GDA Building, Governor House Road, Gawada Tel: (0864)-211312, Email: [email protected]
Loralai Address: Office#12 Qadri Complex, Civil Hospital Road, Loralai Tel: 0332-4501711, Email:[email protected]
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ANNEXURE-III: Quotations for Plaster of Paris Plants
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ANNEXURE-IV: Quotations for Gypsum Boards Unit
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